American Astronautics, one of the X-Prize teams, was planning to launch its one-man test vehicle, the Freedom Flyer, in September. However, due to some issues with the X-Prize rules, they have postponed that launch and are concentrating solely on the larger X-Prize vehicle.

Courtesy of hobbyspace.com, here is the relevant note:

The Freedom Flyer is a precursor to a 3-passenger version that was to be our X Prize entry. However, the X Prize board issued a ruling to us stating that a propulsion system based on the TR-201 engine would be disqualified unless we could demonstrate additional sourcing and general commercial availability for the engine. The original manufacturer, TRW, is not willing to invest the resources necessary to quote restarting production unless we are seriously considering an actual buy, which we are not.

Therefore, we are now concentrating our efforts on our 7 passenger vehicle, based on our American Eagle booster which utilizes an AAC designed and built engine. This vehicle was specifically designed for actual commercial operations in the public space tourism industry. We will be utilizing this vehicle for the X Prize competition, the first production unit now named the Spirit of Liberty. So where does that leave the Freedom Flyer and all those TR-201 engines we have? Well, we are continuing work on the Flyer, but as a much lesser priority, and there will not be a 3 passenger version. Additionally, we have allowed the flight date to slip to allocate the majority of our resources towards the Spirit of Liberty and the X Prize competition.-Bill Sprague

Was the engine they wanted to use built using gov't funds? That might be a reason for disqualification even though I don't see it distinctly stated. It's the only reason I can see for the X-prize staff unrolling the red tape.

It will be interesting if a team in an export restriction zone set-up shop. I think that would mean any non-export rocket engines not designed by a team would be disqualified.... or not.

The idea is not to give the prize away to someone who just fixed up an old rocket, but to drive innovation etc. Also a rocket engine without an unlimited supply is a dead-end tech. Dead ends don't deserve money.

"The American Astronautics Corp. is a group of seasoned 'low cost launch vehicle' designers, builders, testers, and launchers of simple, pressure fed, reusable space launch vehicles which follow the Minimum-Cost-To-Flight philosophy. The Spirit of Liberty is the logical step to the currently in-work commercial space tourism vehicle designed by Sprague, capable of carrying 30 passengers. The Spirit of Liberty will weigh about 10,000 pounds and have an engine producing some 20,000 pounds of thrust. The rocket is 3 feet in diameter and some 42 feet long."

So how does a group become "seasoned" when apparently they've never launched anything? And what seems to have been their only flight ready motor was developed by a large aerospace corporation?

"The Freedom Flyer is a precursor to a 3-passenger version that was to be our X Prize entry. However, the X Prize board issued a ruling to us stating that a propulsion system based on the TR-201 engine would be disqualified unless we could demonstrate additional sourcing and general commercial availability for the engine. The original manufacturer, TRW, is not willing to invest the resources necessary to quote restarting production unless we are seriously considering an actual buy, which we are not."

I find it odd that American Astronautics says they have the expertise to develop a rocket motor themselves, yet make no mention of even attempting to negotiate a deal with TRW where they could manufacture the TRW motor themselves under license.

In the early seventies, Craig Breedlove ran a bipropellant rocket dragster called the "Screaming Yellow Zonker" (a.k.a., the "English Leather Special") which used a homebuilt motor based on TRW's lunar module ascent motor.